Canada dollar has biggest one-day drop since 1971

Sat Oct 11, 2008 2:09pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar closed at its lowest level since March 2007 against the U.S. dollar on Friday, taking its biggest one-day slide in nearly 38 years, as fears of a global recession and slumping commodity prices trumped some better than expected economic data.

The currency hit a weak point of 82.40 U.S. cents, its lowest level since August 2005, before a slight recovery.

Bond prices were lower along with the larger U.S. market, on supply concerns due to massive new issues of government debt to pay for U.S. bailout measures.

The Canadian dollar closed down 3 percent against the U.S. dollar at C$1.1808, or 84.69 U.S. cents. That compares with C$1.1458 to the U.S. dollar, or 87.28 U.S. cents, at Thursday's close.

For the week, the currency shed 8.4 percent, nearly doubling its previous biggest weekly loss since at least 1970. That happened just last week when it took a 4.5 percent nosedive. Thomson Reuters data for weekly percentage changes in the Canadian currency begin in 1970.

"Clearly the Canadian dollar has been completely dragged into the global financial market mayhem," said Doug Porter, deputy chief economist at BMO Capital Markets.

Fears of a global recession and dropping demand have been hammering commodity prices. U.S. crude oil ended the session under $78 a barrel, down over $147 a barrel in July.

"Just based on the drop in commodity prices and in oil alone, I think that would justify a big chunk of today's move," Porter said.   Continued...

<p>Newly pressed Canadian one dollar coins, also know as loonies, at the Royal Canadian Mint in Winnipeg in this file photo from November 14, 2007. REUTERS/Fred Greenslade</p>